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The precursors of several organs reside within the lateral plate mesoderm of vertebrate embryos. Here, we demonstrate that the zebrafish hands off locus is essential for the development of two structures derived from the lateral plate mesoderm - the heart and the pectoral fin. hands off mutant embryos have defects in myocardial development from an early stage: they produce a reduced number of myocardial precursors, and the myocardial tissue that does form is improperly patterned and fails to maintain tbx5 expression. A similar array of defects is observed in the differentiation of the pectoral fin mesenchyme: small fin buds form in a delayed fashion, anteroposterior patterning of the fin mesenchyme is absent and tbx5 expression is poorly maintained. Defects in these mesodermal structures are preceded by the aberrant morphogenesis of both the cardiogenic and forelimb-forming regions of the lateral plate mesoderm. Molecular analysis of two hands off alleles indicates that the hands off locus encodes the bHLH transcription factor Hand2, which is expressed in the lateral plate mesoderm starting at the completion of gastrulation. Thus, these studies reveal early functions for Hand2 in several cellular processes and highlight a genetic parallel between heart and forelimb development.